**See my monthly column, "Futures for You" in Stocks and Commodities Magazine.**

Treasury futures broke major support levels in intraday trade but I am not yet convinced that the trend has reversed. In yesterday's newsletter I suggested that the 115 area in the 30 year bond contract should hold, we now know that that I was a bit off the mark. However, light volume likely exaggerated the selling and may have simply caused a flush of the longs.

The daily low of 114'17 seemed to be well below support and a great attempt at stopping out many of the fickle long traders. If I am right and Treasuries are poised to trade higher in the coming sessions it is crucial that we see a close above 115'13 in the long bond. Failure to do so may lead to a slide to 112'25. The note hasn't experience the same magnitude of selling that the 30 year bond has suffered from. As of the writing of this newsletter the 10 year note was holding support and seemed to have a path of least resistance that points higher overall.

This morning's economic data was overall bond bearish. Weekly jobless claims were better than estimates and housing numbers impressed to the upside. Additionally, stock market short covering may be luring some portfolio adjusting from aggressive investors. Traders are also noting an increasing interest in agency issues relative to Treasuries and the lackluster demand for government issued securities is working against trade.

Many investors are flocking to GSE's bond issues with the belief that the risk of insolvency is relatively low but interest rates are higher than Treasuries. If the Fed is going to practice a "bail out" policy of such firms the demand for their fixed income issues will be bid higher and government Treasury issues lower until the yields are more comparable.

Option Recommendations

**There is unlimited risk in naked option selling.

June 27 - Sell the August 119 calls for 15 ticks or better, be careful with this!!

• June 30^th - Place a GTC order to buy this back for 5 ticks or better
• July 14^th - This order was filled in the overnight at 5 ticks, you should be out with a profit!!

Futures Recommendations

**There is unlimited risk in trading futures.

July 8^th - Aggressive traders may look to sell a September bond at 117'07

July 9^th - If you missed this one, change this order to 117'20

• July 11- Place a limit order to take a profit at 114'25 and a stop order at 116'09 to lock in a profit of about $900 before commissions and fees.
  • July 14^th - Hopefully you were able to take profits prior to the stop being filled. Had you followed this recommendation through to the end you would have been stopped out at 116'09 to take a profit of $937.50 before commissions and fees.

Carley Garner
Research Analyst

There is a substantial risk of loss in trading futures and options.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.